The quality of control actions depends strongly on the availability and the quality of signals to construct the controller. While most control design tools assume all states, hence signals, are measurable, this is often unrealistic. An observer is often necessary to provide signals to use in controller realization. This paper proposes the construction of a reduced order observer and an output feedback controller to solve a set point tracking problem of a combustion engine test bench modeled as an extended Hammerstein system. The asymptotic convergence of the observer is shown and separation principle is also proved. Because in real practice the measured signals are often affected by periodic disturbance due to the combustion oscillations, the controller is extended with an internal model based filter, to remove the effect of the periodic disturbance. Some simulation results are presented, comparing the performance of the proposed output feedback with the state feedback controller. (C) 2015 Elsevier Ltd. All rights reserved.